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Swing Trade Idea (BAC) – July 30, 2024

Our bearish trade for Tuesday, July 30th is Bank Of America Corp. (BAC). BAC is part of the Financial Sector, which is pulling back from the top of an uptrend channel and performed at 5.86% over the last month. BAC underperformed relative to its sector over the same period at 4.69%.

BAC has been in a strong bullish trend since January and recently traded into the top of an uptrend channel, from where it is pulling back. With the Financial Sector also losing strength as it pulls back from recent highs, we expect to see further downside and we are therefore playing a Credit Spread that will generate over 50% Premium over the Width, which is an excellent risk/reward ratio.

As a close, if BAC were to trade above $43 for multiple days, this would invalidate our analysis and we will consider cutting losses on the trade. We will also consider cutting losses on this options trade if the value of the vertical spread moves above $2.12.